John Hancock, Allstate, and the Great Cross-Over

Property/casualty data may have the potential to significantly improve life/health insurers’ products, pricing, underwriting, and claims processing.

(Image source: Allstate Drivewise page.)

The great cross-over starts.

On Monday January 24, John Hancock announced that policyholders participating in its wellness-incentive Vitality Plus program may now receive “Vitality Points” for safe driving—as certified by participation in Allstate’s Drivewise telematics program.

This announcement needs some unpacking in order to understand why it is (or will be, or should be) such a big deal.

Hancock gathers data on Vitality participants through wearable technology (fitness watches and bio-monitoring bands), and through usage data from a meditation app. Policyholders accumulating certain levels of Vitality Points may have their premiums lowered by as much as 25 percent.

Allstate tracks the driving behavior of policyholders enrolled in its Drivewise program using a smartphone app which accesses data from the smartphone, for acceleration, deacceleration, speed, locations, and so forth. It has been reported that policyholders in Drivewise can receive up to 10 percent cash back on enrolling in the program, and up to 25 percent cash back at the end of each policy period.

Here is the cross-over:

  • Prior to the Allstate Drivewise announcement, Hancock was creating price discounts based on relatively new behavioral and biological data, sourced by wearable sensors and apps.
  • With the Allstate Drivewise announcement, Hancock is allowing price discounts based on non-biological data sourced by sensors via an app, recording how a motor vehicle is being driven.

Why this is important:

  • Property/casualty data may have the potential to significantly improve life/health insurers’ products, pricing, underwriting, and claims processing. Life-health data may have a similar potential for property/casualty insurers.

For example, P&C insurers have sensor and non-sensor data on the homes and homeowners they insure (e.g., the use of smoke or moisture detectors, deployment of a home security system, maintenance of the home’s roof and grounds, etc.). The life expectancy and health of homeowners could be correlated with the presence (or absence) of these devices and conditions.

There are two caveats. Improvements in insurers’ top line, bottom line, and customer experiences have to justify the cost of the new data. And use of this data is always subject to legal, regulatory, and social constraints.

Waiting to hear from product managers, data scientists, and actuaries.

John Hancock CEO: Life Insurance Innovation During the Pandemic

Donald Light // Donald Light is a Director in Celent’s North America Property/Casualty Insurance Practice. His coverage areas include: technology and business strategy; transformative technologies such as digital, the Internet of Things, and driverless cars; core systems; and insurance technology M&A due diligence. His recent consulting work includes: developing a strategic IT plan for a specialty insurer, core system vendor selection support; a build vs. buy analysis for core systems; and several due diligence assignments. Light is widely quoted in the press and media, including The Wall Street Journal, The Economist, NBC and CBS Evening News, CNBC, National Public Radio. He is a frequent presenter at industry conferences including those sponsored by ACORD, PCI, and IASA.

Comment (1)

  1. Not just justify the cost of collecting and analyzing this ‘cross-over’ but also being able to collect a sufficiently large amount of data to actually demonstrate that relationships exist to support new premiums (whether smaller or larger) for the interdependent insurance products.

    I have a hunch that insurers offering individual long-term care products still do not have sufficient data for more accurate pricing of those products.

    I wonder how much cross-over data insurers will need to accurately price any cross-over products to generate profitable premium … and how many decades they will need to accomplish that objective.

Leave a Comment